8 questions with authors of Troy University study challenging benefits of Medicaid expansion

View full sizeTroy University professors Scott Beaulier, left, and Phillip Mixon argue that previous studies have overestimated the benefit of expanding Alabama's Medicaid program. They answered questions about their research in an online chat on AL.com on Monday, April 7, 2014.

In case you missed it Monday, Troy University professors Scott Beaulier and Phillip Mixon answered questions on AL.com about the Affordable Care Act.

The professors answered a number of other questions about the controversial law. You can read the full online chat here. Here are some of the highlights:

1. Were you wrong to report in the study that the state’s current administrative costs of Medicaid are about 3.3 percent of benefits? According to the Alabama Medicaid Agency, the federal government picks up about half of those costs.

PhillipMixon

The 3.3 percent is the current cost and will continue to be the cost. The cost of administration is paid for by the taxpayers of Alabama either way. Look at your next paycheck and you will see the administration cost deduced with all other taxes. This money is taken from productive members of Alabama's economy and spent on administration costs.

Scott Beaulier

The admin cost disagreement between us and Alabama Medicaid is a disagreement over how to treat federal money. As we've been saying from the beginning, federal money is not free money and should be counted--there's a reason Alabama Medicaid is reporting 3.3 percent...these are the true costs to Alabamians (and more broadly Americans) of our admin costs. So, a proper accounting should include them--regardless of the state's share versus federal share. In the context of our study, moreover, the admin cost issue is very, very small in driving our differences between the Troy study and UAB. Phillip can speak to just how small. The admin cost issue is somewhat of a red herring, and even if we assumed zero admin cost, we're talking about UAB being way too high in their projections.

PhillipMixon

If we were to drop the administration costs to zero this is still not a winner for the state. The difference in UAB cost estimates and our is $19 million a year. At zero administration cost the state would lose $60 million (under UAB ignoring direct spending) and $200 under our assumptions.

Scott Beaulier

The 1.7% percent admin costs are, indeed, the state share. We think it's misleading to look only at state share because it treats the federal share as though it grows on trees. Throughout the UAB study, there's an assumption that federal money is, more or less, dropped from the sky. We take issue with that kind of thinking.

2. What do you think of the governor's (task force's) idea to move Medicaid to a managed care model? Will that be successful?

PhillipMixon

I believe this is a step in the right direction. The fee-for-service model tend to drive patients to ER's instead of GP's offices. Successful or not is a tricky issue, if the new system is developed correctly then yes it should be successful.

3. Can the Affordable Care Act survive politically?

Scott Beaulier

Yes. As John Boehner has correctly put it, "It's the law of the land." Of course, we've seen dozens of amendments to it by President Obama, and we will see dozens more in his remaining years and in the 2016 administration. So, when is it really no longer ACA? I don't know.

Will it ever succeed in simultaneously increasing access and driving down cost? I think not.

4. Is there a real danger that hospitals, particularly in rural areas, might close because Obamacare cuts funds to compensate them for unpaid bills incurred by the uninsured?

Scott Beaulier

This is a very tough issue and one which we intend to do some more work on. Many people around the state hate the Medicaid expansion but feel it's the only way to assure their rural hospitals will remain funded. We think it's a really bad sign that folks have to get behind the Medicaid expansion for the sake of keeping their rural hospitals open. The truth is many of the rural hospitals have been perpetuated through a very broken entitlement system...keeping them afloat with another big entitlement expansion is very, very bad economy policy.

That said, the issue of "What do we do about rural hospitals?" is a very real one. Some hospitals have already closed or they are near closing. And, a big reason for their closure is over-reliance on ER visits. That aspect of our problems is not going away with Medicaid expanding.

5. Would you consider eliminating the Emergency Medical Treatment & Labor Act, which requires hospitals to treat any patient regardless of ability to pay?

Scott Beaulier

EMTALA serves a vital function in letting hospitals worry about treating a patient first and asking questions later. That said, some of our problems come from its abuse. I would much rather see better co-payment pricing of all people with Medicaid/Medicare than see EMTALA abandoned. Simply directing people to the right providers through pricing could really ease the burden on emergency room use and abuse.

6. Has a market based solution to drive down costs and expand access ever worked in practice?

Scott Beaulier

A purely private system has never been tried. We have a ridiculous number of regulations that restrict insurance market competition; we have another set of occupational licenses that make it very hard to become a doctor, nurse, or even an assistant; and we have a system of entitlements that encourages doctors to prescribe treatment after treatment. That we have very high costs here is, therefore, not a huge surprise.

That said, we also have some of the best health care in the world. To get the best, sometimes you have to pay more for it. And, over time, what has happened to a lot of people is that other portions of income--food, clothing, shelter--have remained fairly constant in terms of spending. So, where can we put our money? Into health care, which will help us live longer...we hope!

A more general question: If expanding government health insurance is not the answer and subsidizing the purchase of private health insurance isn't the answer, what is the best way to address the twin problems of cost and access to health care?

7. If expanding government health insurance is not the answer and subsidizing the purchase of private health insurance isn't the answer, what is the best way to address the twin problems of cost and access to health care?

Scott Beaulier

That's a very big, very good question...the biggest question in this debate. We don't have all the answers--our real purpose was to take down the promises being made in the UAB and UA studies. Folks shouldn't be oversold an argument, and we are humble enough to say there are never "no brainers" in the policy world, contra David Becker here:

In an ideal world, there'd be a lot more federalism when it comes to Medicaid, and Alabama would go the direction of block granting its system. Block granting our general allocation of funds and, perhaps, block granting to individuals who are in generally good health but poor. Give people $5,000 for health care and let them keep a large chunk if they don't use it on health care. It'd be far more efficient, and it would greatly improve the system over the status quo.

This is one small way we could improve. But, to a large extent, innovative, state based reform ideas have gone out the window with Obamacare and its complete assault on federalism.

8. Why will the European model of healthcare not work in this country??

Scott Beaulier

That's a big question that gets way beyond our study. I'd say Obamacare is an effort to make us a lot more like the European model: single payer system is the goal; mandates are part of the means. Will it work? I doubt it. Is it a worthy goal? I'd say no, and I'd say a lot of the alleged good health outcomes we're seeing in Europe are seriously overstated when (1) starting points of citizens are taken into account (i.e., healthier Europeans from birth vs less healthy young Americans); and (2) many qualitative dimensions like length of time waiting for treatment are taken into account.